October 21, 2011

2011 Student Price Index again shows rising costs

The cost of living for an average Kansas State University student has once again increased more rapidly than the cost of living for the average American, according to recently released data compiled by the Kansas State University Economics Club. The 2011 Student Price Index increased by 4.9 percent from 2010. This can be attributed to prices rising in several key categories such as gasoline, tuition, textbooks and housing.

This is very similar to last year’s Student Price Index release, which showed that the price of a bundle of goods typically consumed by a K-State student increased by 5 percent. In 2009 the Student Price Index surprisingly showed a slight price decrease. This was the first recorded deflation in the history of the Student Price Index.

Figures released earlier today by the U.S. Bureau of Labor Statistics indicate that prices paid by urban consumers, as measured by the U.S. Consumer Price Index, have increased by 3.9 percent relative to last year which is lower than the nearly 5 percent inflation measured by the Student Price Index.

Kyle Landau, vice president of the K-State Economics Club and senior in economics, Leawood, coordinated the efforts of several club members who visited local restaurants, grocery stores, gas stations, bars, bookstores and movie theatres to gather information regarding annual pricing during the third week of September.

“As we all should know, $20 will not buy us nearly as much as it could have 10 years ago. The price of nearly everything has increased substantially over the last decade.” Landau said. “Economists describe an increase in prices as inflation; which remains one of the definite concerns of policymakers and economists worldwide. We use the Student Price Index to see how our general expenses as K-State students have increased or decreased over time. When we compare the rate of inflation from 2002 for the average K-State student it is remarkable to see how K-State students have been impacted by inflation 180 percent more than the average consumer."

Katie Gustafson, senior in economics, Williamsburg, Va., is currently president of the K-State Economics Club. After analyzing the Student Price Index statistics Gustafson said, “It is a bit disheartening that students are again impacted by inflation more than the average consumer. As students we are very aware of the price of gasoline as that takes up a signification portion of our budget. I feel we notice that increased cost more than the average consumer," she said. "We hope next year we will see some relief from higher gas prices. Prices of goods we must buy such as tuition and housing increased by almost 8 percent last year. This creates an incentive for students to spend less money on other discretionary items. At least the price of groceries has remained relatively low.”

“There was some good news in this year’s SPI. This year the tuition increase was somewhat in line with changes in other student prices,” Silverwood said. “And when we consider the problems with food production in some parts of the world, the fact that the price of groceries was up less than 3 percent from 2010 and are almost the same as 2009 is encouraging. I know some students were pleased with the fact that the price of beer actually decreased.”

Daniel Kuester, professor of economics, serves as the faculty adviser for the K-State Economics Club.

“Once again, K-State students have been hit harder than the average consumer by inflationary pressures although this year’s change is not tremendously different from the change in the overall Consumer Price Index," he said. "There has been little relief in inflationary pressures on the basic staples of housing, gasoline and tuition for the typical K-State student over the years. Overall this year’s data is somewhat encouraging when we look at the stable prices of movies, pizza and ICAT tickets along with a decrease in the price of beer. The fairly large increases in textbook prices and gasoline may change some student behavior where they wait to buy books until after the semester begins and travel less.”

Increases in the prices of gasoline, up 37.4 percent, tuition, up 4 percent and textbooks up 10 percent, greatly contributed to the Student Price Index's 12-month growth, according to the Economics Club's figures. Other staples in the index include beer, pizza ICAT tickets and movie ticket prices all of which were unchanged from last year or down slightly and that provided some relief to the typical student's budget. The average housing cost for a K-State student increased by 3.5 percent, 7 percent off campus and dorms but unchanged for Greek housing.

“We have noticed that the prices of goods that most of us would consider to be luxuries such as pizza and movie tickets have remained fairly stable. I believe this is because many consumers have less disposable income for these types of expenditures and therefore businesses are fearful to increase their prices because people have elastic demand for these goods," he said. "When the price of these goods increase the revenue collected by firms may decrease due to fewer sales."

Since the K-State Student Price Index data was first collected in 2002 it has shown an increase in the price level of just under 80 percent. Over that same time frame the consumer price index has increased by approximately 27 percent.